Wrongful Arrest of a Vessel – Admiralty Action No. 6.2020 – Judgement dd 21.10.2020

Our Litigation Team in the recent case before the Supreme Court of Cyprus, exercising its admiralty jurisdiction, represented a reputable ship-owning company and successfully obtained a decision canceling an arrest warrant issued against its vessel. The Court addressed issues of ship arrest warrants and examined matters of jurisdiction of the Court to issue such an order.

In the case under examination, the opponent Applicant, a shareholder of the Defendant Company, through an ex parte application based on Article 30 of the Cypriot Merchant Shipping Act, requested from the Court a ship arrest warrant of the Company’s vessel, which constituted the only asset of our Clients’ Company. The Court granted the arrest warrant to the Applicant who claimed, inter alia, breach of her rights, exclusion from the management of the vessel, failure by the Company to provide dividends, as well as an immediate risk of transporting the vessel to Greece for the purpose of its registration and commercial exploitation there. Immediately after the issuance of the warrant our Team objected to the validity of the arrest on behalf of our Clients, citing as the main reasons that the claim in question was not supported by the correct legal basis and the Court lacked jurisdiction, since a claim in rem is a necessary precondition for the issue of a ship arrest warrant and in the present case the vessel was not a party to the proceedings. Furthermore, the Opposition, accompanied by an affidavit, claimed irregular proceedings as well as wrongful grant of the arrest warrant for procedural and substantive reasons.

In its decision, the Court considered it appropriate to examine the objections focusing on the scope of Article 30 (aforementioned) and the vessel not being a party in the proceedings. The Court carefully examined the case-law on the nature and application of Article 30 and concluded that its scope was limited, and that our counsels had rightly argued that it did not cover the issue of a ship arrest warrant. Furthermore, the Judge concluded that it is well established from the case-law (Nakufreight Ltd v. Baltic Levant Lines (2000) 1 AAΔ 1 and Nationwide Shipping Inc v. Του Πλοίου Athena (2012) 1 AAΔ 2343) that the arrest of a vessel is possible and a relevant warrant is issued exclusively in cases of claims in rem. This is also established in Rule 50 of the Cyprus Admiralty Jurisdiction Order.

Concluding, the relevant grounds of objection were successful, and the Supreme Court delivered its judgement and ruled in favor of our Clients by canceling the arrest warrant that was wrongfully issued.

Our Litigation Team was represented by our Partner and Head of the Litigation Department, Mr. Andreas M. Damianou.